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Published: February 22, 2011
 / Spring 2011 / Issue 62

 
 

The M-Commerce Challenge to Retail

With m-commerce just getting off the ground, retailers have many options. The Booz & Company survey offers some relevant insight. Respondents were asked to provide information on the mobile commerce features that they use — in homes, offices, and retail stores — along with the impact of those features on their final purchase decisions. The most commonly used application in homes and offices was taking a picture of a product to share with friends. In stores, consumers most frequently used their smartphones to view mobile ads, ratings, or reviews. They stated that ads changed their purchase decisions 38 percent more often in stores than at home or in the office.

Also popular is the ability to compare product prices among stores via smartphone. Consumers compare prices more often in stores than in the home or office, but the influence of this feature over the final purchase decision is consistent in all contexts. Researching product information via smartphone was also high on the list, regardless of the shopper’s location.

Play to Your Strengths

If you are a retailer seeking an m-commerce strategy, your first step should be to make a solid assessment of your own business. There is no universal, one-size-fits-all path. Rather, a successful strategy should take into account the relevant core technical capabilities of your company, the commercial channels in which you operate (big box or small format retail, e-commerce, kiosks, etc.), the competitive dynamics in your sector, and the current state of the art of m-commerce itself. (Remember, mobile technology is advancing almost daily.) In other words, a mobile strategy needs to adopt the face and persona of the business behind it.

Most retailers begin by leveraging their existing e-commerce capabilities (honed through product websites and supply chain experience) onto mobile channels with little customization. This, at least, gets you into the game and achieves some parity in the market. The next phase is the development of advanced m-commerce capabilities to drive revenue growth: attacking key categories, influencing shopper decision making, and shifting purchases away from competitors to claim market share.

In some cases, retailers should take an offensive strategy: injecting offers and product information into smartphone formats that crowd out competitors and directly affect consumer shopping decisions. For example, outdoor equipment and apparel maker North Face uses GPS and cell phone location data to create “geo-fences” in some areas of the United States. These virtual zones provide special purchasing incentives when consumers are near a retail store that sells its brand.

In other situations, a more service-oriented posture is appropriate to protect market share and enrich an already top-flight customer experience. Take IKEA’s use of augmented reality technology, which allows customers to create a virtual model of the room they are buying furniture for (by entering the dimensions) and then furnish it with 3-D models of items to see how well the pieces fit. Providing an experience like this not only is useful for shoppers but also keeps their attention on the store’s products and minimizes the chances that they will browse the mobile Web for alternatives.

In either case, a set of critical capabilities must be developed to enter this arena, including being able to work with third-party service providers such as Shopkick, Facebook, and Web ad placement and analytics firms AdNetwork, DataXu, and AdMob. In addition, there is the very real need to integrate these outward-facing m-commerce solutions with your own internal IT and marketing systems — the systems that currently gather customer information and analyze business intelligence. Indeed, m-commerce will strain traditional marketing analytics and systems, which are generally not prepared to act decisively on real-time data.

 
 
 
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